Housing market is "running on fumes" says economist

by Steve Randall20 Oct 2017
The divergence of US home sales and prices continues to grow as tight inventory pressures buyers.

Data from Redfin reveals that sales fell 8.1% year-over-year in September nationwide, while prices were up 7.6% to a national median of $288,000 across all the markets in which the online real estate platform operates.
Inventory slumped almost 11% and new listings in September were down 7.7% compared to a year earlier, leaving just 3.3 months of supply at the current sales pace.

The highest price growth was in San Jose (16.3% to $1 million median) followed by Tucson (15.8%) and Tacoma (14.5%).

Three markets saw a year-over-year decline in prices: Camden, NJ (-6.4%), Baltimore, MD (-3.1%) and Newark, NJ (-2.7%).

“The housing market is running on fumes due to low inventory,” said Redfin chief economist Nela Richardson. “September marks the first time since 2014 that we’ve seen three consecutive months of year-over-year sales declines. The inventory shortage is most severe for affordable homes. There has not been an increase in homes priced under $260,000 in two years.”

The fierce hurricane season has taken its toll on market activity in some southern markets.

Houston sales were down 25% year-over-year in August but recovered slightly in September (0.2%). Fort Lauderdale, West Palm Beach, Jacksonville, Orlando and Tampa all saw sales down by more than 15%.

Miami saw the largest September sales slump, down 38.4% year-over-year but Richardson believes the market will rebound as Houston has.

“The good news is that so far markets affected by Hurricane Harvey, like Houston, are rebounding in terms of sales quickly,” said Richardson. “That bodes well for Floridian markets.”

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